How Self-Aware Leaders Drive Business Performance: From Insight to Impact

What influences the way you lead? How do your values, personality, and life experiences shape your leadership? And perhaps most importantly, how do others experience you as a leader?

These questions shine a light on one of the most critical leadership capabilities, self-awareness. Research consistently shows that leaders who understand both their internal drivers and how they are perceived by others are more effective, more trusted, and better equipped to lead through complexity. This article reveals why self-awareness is essential for leaders and how to develop this leadership superpower using research backed strategies.

Why self-awareness matters

Consider Sarah, a senior project manager who believed she was a collaborative leader. She prided herself on having an open-door policy and encouraging input from her team. Yet her colleagues described her as intimidating in meetings and dismissive of other people’s ideas. Sarah was unaware of this blind spot, and over time her team stopped sharing their concerns or new ideas. Mistakes went unreported, innovation slowed, and trust within her team eroded.

By contrast, James, a manager in a financial services firm, entered a leadership program believing he was an effective leader. As part of the program, he completed a 360-degree feedback process that revealed his team, and boss saw him as indecisive and inconsistent in managing performance. At first, James disagreed with the feedback. However, with support from coaching and guided self-reflection, he began to examine it more openly. Over time, he changed his approach by addressing issues more directly, setting clearer expectations, and asking for regular feedback from colleagues. Two years later, James was promoted to a more senior role and after being recognised for the clarity and decisiveness that once eluded him.

These examples show there are two essential dimensions of self-awareness.

Internal self-awareness: Which involves recognising how your emotions, values, personality, and experience influence your thinking and behaviour. Leaders with strong internal awareness regulate their responses rather than being controlled by them. For example, an enthusiastic manager who realises they tend to do most of the talking in meetings can learn to pause and listen, giving colleagues more opportunities to contribute.

External self-awareness: This is about understanding how others see you. Leaders often assume others experience them the way they experience themselves, but research shows this is rarely the case. Blind spots, whether hidden strengths or weaknesses, can erode trust and result in a career limiting reputation. A leader who thinks they are collaborative may in fact be perceived as intimidating, which discourages colleagues from sharing ideas or providing feedback.

Consider these questions to check your current self-awareness:

• What aspects of my personality, values and experience help me as leader? What aspects are hindering my leadership?

• How would my current co-workers describe my approach to leadership? When did I last ask for genuine feedback from my colleagues and how did I use the feedback?

Multiple studies confirm while most people believe they are self-aware; the accuracy of their self-perceptions is only “moderate” at best. Leaders who overestimate their effectiveness are more likely to have dissatisfied staff and higher turnover, while leaders recognised by others as self-aware are consistently rated as more effective and better performers.

The ripple effects of self-awareness

Decades of research show a leader’s level of self-awareness shapes outcomes in the workplace in profound ways:

• Improved decision-making and performance: Self-aware leaders make better decisions and perform better because they can test their biases and regulate their reactions.

• Enhanced self-management and relationships: Self-aware leaders manage stress more effectively, allowing them to maintain constructive relationships. Their teams are more likely to trust them, which is especially valuable during times of change or uncertainty. Less self-aware leaders are typically impulsive and impatient which results in compromised decision-making and unstable relationships.

• Ethical instead of toxic leadership: Self-aware leaders are seen as more ethical, responsible, and inspirational. By contrast, leaders who lack self-awareness are more prone to destructive behaviours such as micro-management, bullying, or dishonesty. These behaviours have flow on effects as research shows their staff often also demonstrate destructive behaviours, including collusion, blind conformity, or burnout.

• Cultivating other leaders: Perhaps most importantly, leaders who develop self-awareness are more likely to cultivate leadership in others. This has a positive multiplying impact across teams and organisations.

How leaders build self-awareness

The encouraging news is self-awareness can be developed, and I have seen how this can be achieved with intentional learning design and facilitation. Here are the most impactful methods for enhancing self-awareness based on research and my years of working with CEOs to frontline leaders:

Leadership coaching, particularly when combined with robust personality, values, and emotional intelligence assessments, is one of the most effective pathways. Coaching provides a safe space for leaders to test assumptions, receive constructive feedback, and practise new approaches. From my experience, coaching works best when leaders are willing to challenge themselves and their organisation provides necessary support and space for them to do so.

Leadership development programs incorporating 360-degree feedback, experiential learning, and peer coaching provide powerful insights about a leader’s signature strengths, their challenges and how to improve. The most effective programs encourage participants to share their learning experiences with peers, test new behaviours, and receive real-time feedback. This creates communities of leaders who hold one another accountable and support ongoing growth.

Self-leadership interventions offer an accessible way to build awareness. Reflection and self-monitoring sharpen awareness of emotional triggers and habits. For instance, a leader can review and record how they responded in a stressful situation or meeting and the effect of their response for colleagues. This helps connect their intent with impact.

Developing a leader identity anchors self-awareness in values and aspirations. A powerful insight exercise is to write a short “Leader I am and becoming” statement or mapping your leadership history. This helps clarify the kind of leader you want to be. Sharing with your colleagues aspects of how your identify shapes your decisions and actions builds trust, mutual understanding, and accountability.

Kick-starting your self-awareness

Developing self-awareness does not require questioning every thought or action you take. However, if you are up for enhancing your leadership, here are some steps to kick-start your self-awareness:

• Record your weekly reflection for questions such as “What impact did I intend to have this week, and what did people actually experience?” This illuminates gaps between intention and reality.

• Ask trusted colleagues to give you one strength and one area to improve. This creates valuable feedback loops and helps uncover blind spots before they cause problems.

• Run a perspective-taking exercise, such as re-writing a recent decision from a team member’s point of view and testing it with them. This builds empathy and humility.

These small practises build over time, strengthening both internal and external self-awareness.

Developing self-awareness is like building a leadership superpower. Leaders who accurately understand themselves and how others experience them, unlock the ability to adapt, to inspire trust, and cultivate leadership in others.

Stay tuned for the next Leadership Reimagined article, where I explore ways to develop essential skills for the next generation of leaders.

Boult Executive Psychology partners with organisations to design evidence-based leadership and coaching programs that help leaders sharpen their self-awareness and elevate their performance in healthy and sustainable ways.

References:

Amundsen, S., & Martinsen, Ø. L. (2014). Self–other agreement in empowering leadership: Relationships with leader effectiveness and subordinates' job satisfaction and turnover intention. The Leadership Quarterly, 25(4), 784-800.

Bracht, E. M., Keng-Highberger, F. T., Avolio, B. J., & Huang, Y. (2021). Take a “Selfie”: examining how leaders emerge from leader self-awareness, self-leadership, and self-efficacy. Frontiers in psychology, 12, 635085.

Gross, J. J., & John, O. P. (2003). Individual differences in two emotion regulation processes: implications for affect, relationships, and well-being. Journal of personality and social psychology, 85(2), 348.

Da Fonseca, S., Myres, H., & Hofmeyr, K. (2022). The influence of self-awareness on effective leadership outcomes in South Africa. South African Journal of Business Management, 53(1), 2720.

Jones, R. J., Woods, S. A., & Guillaume, Y. R. F. (2016). The effectiveness of workplace coaching: A meta-analysis of learning and performance outcomes from coaching. Journal of Occupational and Organizational Psychology, 89(2), 249–277.

Kenny, D. A., & West, T. V. (2010). Similarity and agreement in self-and other perception: A meta-analysis. Personality and Social Psychology Review, 14(2), 196-213.

Lee, A., & Carpenter, N. C. (2018). Seeing eye to eye: A meta-analysis of self-other agreement of leadership. The leadership quarterly, 29(2), 253-275.

Mosson, R., Hasson, H., von Thiele Schwarz, U., & Richter, A. (2018). Self-other agreement of leadership: A longitudinal study exploring the influence of a leadership intervention on agreement. International Journal of Workplace Health Management, 11(4), 245-259.